Wenzhou now known for second-hand Ferraris
Wenzhou, the wealthy port city in eastern China’s Zhejiang province, was once famous for its savvy real estate speculators. Now, however, this centre for the country’s new wealth has become noteworthy for the ongoing slide of its real estate market.
In January, Wenzhou saw the average price of newly built property decline for the 29th straight month, according to figures from the National Bureau of Statistics. Last month also marked the eighth straight month that the entrepreneurial hub was the only city among the 70 communities surveyed by the bureau to report a drop in home prices.
The only good news for speculators in the city was that home prices declined less in January – 1.2 percent – than they had in December. Over the last three years, home prices in Wenzhou have fallen off by 20 percent.
Speculators Hit by Market Restrictions
The resale market for housing in Wenzhou was badly hit following the government’s second round of cooling measures announced in September 2010, with the city having posted the country’s sharpest decline in prices after recording the highest appreciation, state broadcaster China Central Television (CCTV) reports.
A real estate agent in Wenzhou told CCTV that the number of housing transactions has dropped 50% to 60% to only five to six deals being closed every month, and the impact this year has been harsher than the sector expected.
Prior to the slide of prices in the city, Wenzhou’s residents had been famous for plowing the profits of the city’s many successful private businesses into real estate speculation.
In more recent times, the city’s entrepreneurs have made headlines for their inability to repay debts as a credit clampdown has led many to be unable to finance their businesses. During the last six months of 2012 more than 80 Wenzhou businessmen were reported to have committed suicide or declared bankruptcy after being unable to meet their financial obligations.
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